Industrial Property Investments

Industrial Property Investments

Industrial real estate includes all land and buildings either utilized or suited for industrial activities, such as: production, manufacturing, assembly, warehousing, research, light storage, distribution and some related office requirements of tangible goods rather than service-related users.

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There are usually specific areas in each city or county designated for industrial properties based on zoning codes which details where these spaces can be constructed and operate, so that the activity on these sites does not disrupt businesses or residencies that might have otherwise been adjacently placed.
Zoning ordinances are usually very specific, defining where certain industrial activities can and can’t take place. The term “industrial” covers a wide scope of properties, so potential investors need to understand the differences between each type of industrial property to fully understand the risks and rewards that each one carries.

Industrial Property Investment offers greater diversity and higher stability than other types of real estate investments. Industrial tenants usually sign up for and maintain much longer lease terms – frequently 5 years or even longer. Long term cash flow is one of the most attractive qualities of this type of property.

Industrial properties provide low maintenance costs – usually for roof and structure and sometimes the parking lot. This means that owners have a much higher net from rental payments than in other types of leasing.

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Tenants have greater responsibility for being current on rent and usage of the facility. While they usually have no ownership interests in the property, they normally select a property to lease based on business needs such as zoning, proximity to freeways or clients, and labor force availability among other things.

There is a much lower risk of market saturation because many businesses and even non-profit organizations are looking for warehouse/mixed space. Many properties combine warehouse or production space with offices, which makes them very attractive to a large number of potential tenants.

Industrial properties come in many shapes and sizes. Let us help you navigate the options in Ohio and set you up for long-term returns. Carefully considering your goals as well as the opportunities in your unique community, we will help you explore the following building options:

  • Warehouse/Distribution
  • Manufacturing – Light and Heavy
  • Refrigeration/Cold Storage
  • Telecom/Data Hosting Centers
  • R&D facilities
  • Showrooms
  • Laboratory space (including “wet labs”)
  • Biotech

Classes of Industrial buildings

Class A Properties

Are probably going to be the newest and best-quality structures in a market area including assets like good locations (near roads, railroads, airports, amenities like restaurants and bars and being close to major population and business centers.)

Industrial buildings today are constructed of high-quality materials and feature items like tall ceilings, clear space (no interior pillars) and top of the line mechanical and utility systems. They usually have high-income earning tenants and low vacancy rates.

They provide investors with greater security because there are very few outstanding issues that will require heavy investment into the facility. They are however priced higher with lower CAP rates, especially if they are fully leased, the lower risk to investors and can be a great option for preserving/passive investment.

Do you want to invest in a warehouse space? A showroom? Depending on your budget and future goals, the team at Perfect RealEstate Investments can help you determine which size industrial property is right for your investment goals. We will be there to provide guidance throughout your journey.

Class B Properties

Are usually older buildings or newer ones with fewer or no amenities. Rental income is, of course, typically lower than for Class A buildings. However if a Class B building is well-maintained, an investor can conceivably convert it to A or B+ class buildings through renovations and improvements.

These properties can provide a more attractive investment because of the higher risk of potential vacancy issues. The flip side is that they provide immediate cash flow and can be “held” for appreciation if the property is in a desirable location.

Modern-day rezoning for industrial real estate can also include making an area multifamily or mixed-use in order to increase city density and avoid a proliferation of needs for costly infrastructure additions like roads, so an investor with the proper foresight buys a property investment that is likely to fall into this category.

Class C Properties

Are usually 20 or 20+ years old, and probably have some deferred maintenance issues, and/or are located in less-than-desirable areas. These buildings will probably be on the lowest end of rental rates in the market, making the possibility of passive investment less likely.

If an investor is willing to get creative and put time and money into the property, it can be converted into higher-class assets through renovations and updates and create enhanced profit OR a chance to remortgage and take money out, if done well.

For an owner/user, this type of property can be improved and create both more income and improve the appearance for their own business.

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